Gas Price

Gas price is the amount a user pays per unit of gas to have a transaction executed on Ethereum and similar chains — effectively the bid in an ongoing auction for scarce block space. It is quoted in gwei, where one gwei is a billionth of an ETH, and the total transaction fee equals gas used multiplied by the gas price.

Since the EIP-1559 upgrade in 2021, Ethereum's gas price has two components. The base fee is set algorithmically by the protocol and moves with congestion — rising when blocks are more than half full, falling when they are emptier — and it is burned, permanently removing that ETH from supply. On top of it, users add a priority fee (tip) that goes to the block proposer as an incentive to include their transaction sooner. Wallets handle this by letting you set a maximum fee you are willing to pay; you are refunded whatever the actual base fee does not consume. For example, during quiet hours the base fee might sit at a few gwei, making a simple transfer cost cents, while a frenzied token launch can push it into the hundreds of gwei.

A common misconception is that a low gas price makes a transaction fail; underpriced transactions do not fail — they simply wait in the mempool, sometimes indefinitely, until fees fall or the sender replaces them with a higher bid. Gas prices on layer-2 rollups follow the same logic but are usually far lower, since they amortize Ethereum's costs across many bundled transactions.